PSX stays bearish on IMF, policy rate uncertainty

KARACHI: Conditionalities before the start of the final review with the International Monetary Fund (IMF) and uncertainty about the possibility of a rate cut given the Ramazan-driven spike in inflation

kept investors in a jittery mood as a result the benchmark KSE 100-share index closed the outgoing week in the red.

Arif Habib Ltd (AHL) said the stock market remained under pressure throughout the outgoing week, primarily due to divided opinions about the upcoming monetary policy decision, alongside the government’s negotiations with the IMF for final review.

Concurrently, the formation of the cabinet and the appointment of Muhammad Aurangzeb as finance minister brought resolution to lingering uncertainties.

AKD Securities Ltd said the additional conditionalities including expanding the tax net, removing specialised tax regimes, reviewing the NFC award, halting gas supply to power producers, and terminating gas subsidies for fertiliser plants all seem to be long-term goals that are put forward by the lender to possibly include in the budget 2024-25 budget.

On the economic front, according to AHL, the government raised Rs93bn against a target of Rs50bn through Ijarah sukuk, while broad money (M2) increased by Rs496bn to Rs32.7 trillion as of March 1. Additionally, the SBP reserves increased by $17 million to $7.9bn in the week ending on March 8. The rupee appreciated slightly against the US dollar at Rs278.74 gaining 29 paise or 0.11pc week-on-week.

Hence, the benchmark KSE 100-share index closed at 64,816 points, down by 977 points or 1.5pc week-on-week.

Sector-wise negative contributions came from fertiliser (215 points), oil & gas exploration (190 points), commercial banks (174 points), oil & gas marketing companies (103 points) and power (55 points). Meanwhile, the sectors which mainly contributed positively were automobile parts (20 points), paper & board (6 points) and chemicals (4 points).

Scrip-wise negative contributors were Dawood Hercules (203 points), Oil and Gas Development Company Ltd (108 points), Engro Corporation (78 points), Bank Al-Habib Ltd (68 points) and United Bank Ltd (68 points). On the flip side, scrip-wise positive contributions came from Meezan Bank Ltd (62 points), Engro Fertiliser (52 points), Lucky Cement (47 points), Thal Ltd (20 points), and Pakistan Telecommunication Company Ltd (18 points).

Foreign buying continued during the outgoing week, clocking in at $2.7m compared to a net buy of $6.3m last week. Major buying was witnessed in commercial banks ($1.9m) and cement ($1.83m). On the local front, selling was reported by companies ($2.5m) followed by broker proprietary ($1.7m). Average volume dipped 20.1pc to 340m shares while the average value traded witnessed a steep fall of 30.5pc to $41m week-on-week.

AHL said on the successful conclusion of the IMF review, Pakistan would receive the final tranche

of $1.1bn under the current $3bn Stand-By Arrangement. Additionally, the energy minister has emphasised the importance of addressing the energy circular debt, with efforts to expedite its resolution underway any favourable progress in this regard would uplift market sentiment.